Where does all the money go? An audit of cost and waste distribution in a second-tier peri-urban hospital.
OBJECTIVE
To determine the probable effect of increasing clinical frugality on health system expenditure by measuring cost distribution and waste at an individual patient level.


METHODS
Retrospective cost analysis evaluating the distribution of variable costs (i.e. costs excluding salaries and other fixed expenses) and wastage (i.e. expenditure without adequate clinical gain).


METHODS
A peri-urban regional referral (level 2) hospital and two district hospitals.


METHODS
500 folders (350 inpatient and 150 outpatient).


RESULTS
Accommodation costs accounted for the largest proportion of overall admission costs (42.3%), followed by drugs (19.5%), intravenous fluids (15.4%), laboratory investigations (12.9%) and radiology (10%). Waste accounted for 4.4% (R15.15, SD 41.92) of mean inpatient variable costs of R344.33 (median R208.89, minimum R19.06, maximum R5, 627.25) and this mean admission cost concealed a group of high-cost admissions, with the most expensive 5% accounting for 27.1% of total variable costs and 24.9% of waste.


CONCLUSIONS
Four concepts important for economical bedside decision-making emerged: 1. Cumulative costs mount rapidly, even if individual items appear cheap. 2. The savings achieved by foregoing the use of an individual item (the variable cost) may be considerably less than the listed total cost to the State of that item (fixed costs are unaffected by reduced short-term utilisation.) 3. More care when ordering investigations and therapy may reduce waste. 4. Global views of hospital costs conceal a group of patients whose care is more expensive than average but who may be difficult to identify prospectively. Although the wastage rate in this group is about the same as the global rate, it may represent a useful target for future study.
Parrish
A G
AG
Department of Medicine, Cecilia Makiwane Hospital, Mdantsane, East London.
D000293:Adolescent; D000328:Adult; D000368:Aged; D003363:Cost Control / Q000379:methods; D003365:Costs and Cost Analysis; D004469:Economics, Hospital; D004992:Ethics, Medical; D017048:Health Care Costs; D005102:Health Expenditures; D006295:Health Resources / Q000191:economics* / Q000706:statistics & numerical data / Q000600:supply & distribution; D006300:Health Services Misuse / Q000191:economics; D006767:Hospitals, District / Q000191:economics; D006786:Hospitals, Urban / Q000191:economics*; D006801:Humans; D008485:Medical Audit; D008875:Middle Aged; D010818:Practice Patterns, Physicians'; D012189:Retrospective Studies